Sino-Forest Corp., the Chinese timber company that ranks among Paulson & Co's most disastrous investments in a disastrous year, said today that the fuss was much ado about nothing.
The Toronto-listed company said today that an independent investigation had refuted a June 1 report from short-seller Muddy Waters that sent its share price into a tailspin. Muddy Waters accused Sino-Forest of overstating its timber holdings in China.
While the committee was unable to verify Sino-Forest's valuation of its forestry holdings, it did confirm its timber assets and titles, Sino-Forest said, rejecting the "substance" of Muddy Waters' allegations.
"This report proves that Sino-Forest is a real company with real assets, real revenue and in huge stark contrast to Muddy Waters' allegations," CEO Judson Martin said. Martin blasted Muddy Waters for a "basic lack of knowledge of how forestry rights work in China."
Muddy Waters' Carson Block rejected the report, noting that its timing "makes clear that the directors and officers are responding to the criminal investigation announced last week by the integrated market enforcement team of the Royal Canadian Mounted Police."
Paulson sold its entire 12.5% stake in Sino-Forest in the weeks following the allegation. The hedge fund said it lost C$562 million on the investment.